The appellant deposited a forged cheque into its account at the respondent bank.
The drawee bank cleared the cheque by mistake and the funds were credited to the appellant's account and subsequently transferred to related accounts.
Upon discovering the forgery, the drawee bank requested the return of the funds.
The respondent bank restrained the funds in the appellant's and related accounts and returned them to the drawee bank.
The Supreme Court of Canada held that the drawee bank had a right to recover the money paid under a mistake of fact, as the appellant had given no consideration and had not changed its position.
The Court also held that the respondent bank was entitled to trace the funds into the related accounts at common law, as the funds remained identifiable.
